In 1541 the area alongside the Ghetto Vecchio was designated as the place of residence for Levantine Jews. This mixed fairly wealthy group com¬prised both merchants from the Ottoman empire and those who had been expelled from the Iberian peninsula in 1492. Immediately after the end of the war with the Turks (1537-40) Venice faced severe economic difficulties: there was a sharp drop in the volume of trade with the East, and competition from the port of Ancona was beginning to make itself felt. So the Levantine Jews were manna from heaven as far as the Cinque Savi alla Mercanzia (the Venetian Trade Authorities) were concerned.
The ghetto was extended to include gardens and a few more houses, and the procedures applied were slightly different from those for the Ashkenazi. The Levantines were required to wear an identifying badge, but they were not forced to engage only in either moneylending or strazzaria. The period of stay in the ghetto was relatively brief (initially four months, it was later extended to as much as two years) and it was many years before the Levantine Jews were allowed to settle there with their families.
The merchants brought oriental customs with them. According to Leone da Modena, 'they prayed after the Turkish manner'. They also wore turbans, while the women wore expensive clothes, costly jewellery and tall stiff caps decorated with precious stones. A far cry from the modest habits of the German Jews.
With the arrival of the so-called nazione ponentina (the Sephardic Jews) in 1589, the Venice ghetto took on its definitive form: loan banks and second-hand cloth shops and various synagogues distributed around the main campo - a mixture of tall narrow buildings and the more elegant palazzetti owned by the Levantine members of the community. The limited space within the Ghetto Novo was soon insufficient (with only two square metres per inhabitant), so the houses were further divided by wood-partitions and more floors were added to the buildings (some became as high as nine storeys, and could be ranked as 16th-century precursors of the modern skyscraper).
Each national group had its own synagogue, and although carefully anonymous on the outside, the richly decorated interiors were a source of rivalry between the various nazioni. In spite of all the economic and fiscal limitations, the community played an increasingly important role in the commercial life of the Venetian Republic: the ghetto became a centre of trade not only for Jewish residents and visitors but also for the Christian Venetians, who poured into the district every morning when the gates were opened.